The Pacific Maritime Association sees the medical provisions of the new International Longshore and Warehouse Union contract as a win-win proposition for both parties.
According to the recently-released 2014 PMA annual report, the ILWU will continue to enjoy what the University of Chicago’s NORC research center said is one of the “top 1 percent most expensive union plans in the nation.”
Employers, meanwhile, will continue to enforce administrative changes that have saved the plan more than $100 million since January 2013, largely by cracking down on the “rampant waste, abuse and fraud on the part of out-of-network health care providers.”
PMA described the benefits of the medical plan as giving dockworkers and their families nearly unlimited coverage with only minimal costs to ILWU members. “These benefits will continue, with workers still paying zero premiums, zero deductibles or copays for in-network services and receiving prescription drugs for a $1 copay (or zero if by mail order.”
Those benefits could have been weakened if employers had stood firm on negotiating a compromise with the ILWU in which union members would have had to pick up the costs associated with the so-called Cadillac tax in the Affordable HealthCare Act. The PMA had said when negotiations began in May 2014 that they could not afford to absorb the millions of dollars of extra costs associated with the Cadillac tax, but employers ultimately gave in to the ILWU’s demands and dockworkers will not pay the tax.
The annual report stated that employers knew maintaining health care benefits was a top ILWU priority, so in order to make the plan palatable to both sides, “PMA crafted a negotiating strategy focused on reining in controllable costs without sacrificing worker benefits.” Employers identified bills from out-of-network medical providers as the main culprit. “A large number of suspected billings are from a small number of out-of-network providers in Southern California,” the report stated.
Since 2013, thousands of claims worth more than $100 million have been suspended because of suspected fraud and abuse, and the investigations continue, according to the annual report.
Suspected abuses include billing for services not rendered, producing medical records with identical details for multiple patients, billing for similar procedures on multiple family members on the same day, misclassifying prohibited surgeries in order to gain coverage of unnecessary procedures and offering benefits to patients if they agreed to undergo medically unnecessary procedures.
The ability of employers to maintain Zenith American as the plan’s administrator, along with its fraud-prevention partner, TC3 Health, will allow the PMA to continue the process of cracking down on fraudulent claims. The ILWU the past two years made repeated efforts to remove Zenith American under the mistaken impression that benefits had been cut, PMA stated.
As of this April, a federal investigation resulted in convictions of two individuals and a guilty plea by a third person on charges related to defrauding the plan, the report stated, and the investigation is ongoing.